NEW DELHI: The ministry of housing and urban poverty alleviation has formed a internal committee to evolve a workable strategy for reducing the time taken in approval of real estate projects which could ultimately reduce the cost of houses by 25 to 40%, minister of housing and urban poverty alleviation Kumari Selja said on Friday.

The committee, which will be chaired by Dhanendra Kumar, former chairman of the Competition Commission of India, will submit its report in four months, said the minister at a conference on affordable housing organised by The Associated Chambers of Commerce and Industry of India (Assocham).

"It is estimated that the cost to ultimate consumer could be 25 to 40% lesser if the time of granting approval is reduced to six to eight weeks," she said.

Real estate industry experts say about 70 approvals are required for a typical housing project which take between two to three years. The lack of coordination among multiple government agencies and delays result in higher costs which need to be passed on to the consumer.

The ministry has also recently set up the Credit Risk Guarantee Fund Trust, which will provide loans up to Rs five lakh for low income housing. "The initial corpus of this fund will be Rs 1,000 crore and we hope it will catalyse about Rs 20,000 crore of affordable housing credit," she said. The Union Budget for the year 2012-13 has allowed external commercial borrowings for developing low cost housing, which will lower interest cost for developers and ensure better capital availability for the segment.